Retail traders have been mostly unfazed by the market rout, pouring $1.8 billion into stocks on Tuesday alone

• Retail traders bought $1.8 billion worth of stocks Tuesday as the broader market slumped.
• Retail investors have long been dip buyers, like in the Evergrande crisis, for example. 
• Amid the current rout, retail traders have been “strong dip buyers,” Vanda Research said.
• Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Retail traders poured into stocks as markets cratered this week.

In a report on Wednesday from Vanda Research, analysts said the retail crowd bought more than $1.8 billion worth of stocks on Tuesday. Meanwhile, the S&P 500 Index fell as much as 2.8% to bring its year-to-date loss to about 8%. 

The market has had a shaky start to in 2022 as the US Federal Reserve has signaled it will continue tightening its monetary policy and begin raising interest rates likely in March. Adding to the rout has been geopolitical turbulence caused by Russia amassing troops on its border with Ukraine.

But the rout hasn’t really fazed retail traders yet, Vanda said, and “they’ve been buying equities on every single trading day this year.” Retail investors were “strong dip buyers” Friday and Monday, and only showed a hint of weakness Thursday afternoon when they briefly sold, the analysts noted.  

Further to Vanda’s point, Fidelity data showed the the 30 top retail securities from Friday to Tuesday were bought more than sold. The only two securities that retail traders mostly sold were bearish products, including the ProShares UltraPro Short QQQ ETF. 

“This gives us confidence that our findings are quite realistic,” the analysts said.

On Wall Street Bets, the Reddit thread behind meme-stock mania, retail traders mostly talked about Microsoft, Tesla, and GameStop, on Tuesday, according to Quiver Quantitative data. Meme-stocks AMC and Palantir also made the list of most-mentioned stocks. 

The retail trader cohort during the pandemic has been known to enthusiastically buy the dip when markets swoon, using any slide as an opportunity to add their favorite names at a discount. In October, Morgan Stanley analysts said their fervent dip-buying habits have been a saving grace for major indexes, especially during market events like the Evergrande-induced rout last fall.

Retail traders have become a force in the market since last year when millions mobilized on Wall Street Bets and drove massive gains in the stock of ailling companies like GameStop, AMC, BlackBerry, and more.